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Duluth City Council puts off street plan

The Duluth City Council had planned to convene tonight for a discussion to set the stage for a second reading and presumed adoption of a street-funding plan come May 27.

But as the idea of creating new monthly street fees sparked divisions among councilors late last week, Council President Linda Krug decided to call off the special meeting.

Krug described the proposed street plan as “just not ready for prime time yet.”

She explained that as tonight’s planned meeting approached, it became clear it would take more time to fashion an ordinance that could garner sufficient councilor support. But Krug remains optimistic the council will have a proposal to consider when it convenes for its next regularly scheduled meeting a week from Tuesday.

The council has been kicking around the idea of attaching a $5 to $8.50 monthly street fee to residents’ water and gas bills to help pay for street improvements. The city has been searching for a funding mechanism to replace at least a portion of the $6 million per year it used to receive as a cut of revenue from the Fond-du-Luth Casino. That money stopped flowing in 2009, when leaders of the Fond du Lac Band of Lake Superior Chippewa, which operates the casino, determined the profit-sharing agreement no longer could be justified, based on the value of the city services it received in return. That position subsequently was affirmed by the National Indian Gaming Condition, but it remains the subject of ongoing litigation.

Several councilors have misgivings about the idea of a street fee.

While 2nd District Councilor Joel Sipress said he believes there is consensus that the city must do more to improve and maintain its streets, he said: “We’re trying to balance that with concerns many of us have about the city’s growing reliance on fees.”

The city already charges Duluth residents $5 per month to pay for street lights.

Sipress said such fees fall most heavily on people of modest means.

“With fees, you don’t differentiate on the basis of income or wealth,” he said. “Everyone pays the same. A young renter working for just above the minimum wage would pay the same as someone who is far more economically comfortable.”

Krug said she understands Sipress’ concerns but said there also are certain advantages to adopting a fee instead of increasing the city’s property tax levy.

“If we rely on property taxes alone, we will lose a whole season,” she said, explaining that the already-established levy is set well in advance. However, a fee could be instated or lifted at any time, should the city prevail in its casino litigation.

Any continued and prolonged delay in street maintenance worries 1st District Councilor Jennifer Julsrud, who warns the city could face far more expensive repairs down the road because of neglect today.

Krug said another option would be an interim street fee, with a shift toward property tax funding in the near future.

She said another advantage to a fee versus a tax is that it would apply to both regular taxpayers and tax-exempt nonprofit entities.

But Sipress expressed concerns that city operations funded by fees could be placed on autopilot and might not be subject to the same healthy pressure to prioritize that shapes other parts of the city budget that are funded by taxes.

For his part, 4th District Councilor Howie Hanson said he was relieved to learn tonight’s special meeting had been canceled and voiced his opposition to any efforts to put street fees on a fast track.

Hanson said he also disapproves of efforts to increase the property tax levy to support street improvements, contending that funds could be found elsewhere in the budget.

Duluth Chief Administrative Officer David Montgomery said the city doesn’t have large sums of money lying around and would need to make commensurate cuts elsewhere to pay for street improvements previously supported by casino revenues. He noted that about 75 percent of the city’s budget is related to employees and suggested any significant belt-tightening is apt to involve staffing cuts.

Hanson said he remains unconvinced and suggested Mayor Don Ness’ staff and administration should come up with a plan instead of relying on the city council to come up with funding.

“The City Council is getting thrown under the bus on this issue,” he said. “I think we need to return it to administration and not ask but tell them to provide some leadership.”

But Krug said the council has been talking about how to fund city street work for two years now and has held multiple community meetings on the issue. Given all the work that’s gone into the matter, she’s not eager to turn her back on it now — even though the discussion likely will be difficult and potentially contentious.